Who are World's Top 10 Largest Creditor Nations?

[Shotgunner51]

Germany is the world's 3rd largest creditor nation, and 1st largest in EU-28 (now EU-27 plus UK, excluding Norway and Switzerland) followed by Netherlands, Belgium, Denmark and Luxembourg.

Figure 1: Total Net International Investment Position with the rest of the world, EU-28 Member States, 2015 (EUR 1 000 million)

Economies with higher positions in financial liabilities abroad than financial assets (i.e. a negative net IIP) are considered as net borrowers or debtors. The top net borrowing economies in the EU-28 in absolute terms in 2015 were Spain with a negative net IIP of EUR -974.9 billion, Ireland with EUR -532.1 billion, Italy with EUR -395.6 billion and France with EUR -358.1 billion.

A similar picture is given by figures on net external debt, which showed the highest volumes of indebtedness in the EU-28 in Spain and Italy (EUR 1 010.5 and 988.2 billion respectively) in 2015. Financial stability analysis is in this context more concerned about the sustainability of long-term negative net IIPs and their size in relation to total economic activity (usually expressed in % of GDP), and in relation to current account balances. Negative net IIPs - if maintained for longer periods - could reveal structural rigidities in local credit markets with the consequence of long-term and accumulating debtor positions towards the rest of the world. However, these values have to be assessed in the context of a multitude of macroeconomic indicators, in order to avoid premature conclusions on macroeconomic imbalances without knowing the full picture. While the net borrowing positions of Italy and France assumed 24% and 16% of their total GDPs in 2015, several other European countries reported negative net IIPs with the rest of the world close to or more than 100% of their total GDPs. In 2015 this concerned in particular Ireland (208%), Greece (133%), Cyprus (129%), Portugal (109%) and Spain (90%) in the EU-28, as well as Serbia (106%). Within the framework of a reinforced European economic governance after the financial and economic crisis, the European Commission has developed a set of scoreboard indicators to identify harmful macroeconomic imbalances. The net IIP as a percentage of GDP is one of the indicators included in the Macroeconomic imbalances procedure (MIP) for early warnings and national values are carefully monitored on an annual basis. The indicative threshold applied for benchmarking negative net IIPs is 35% of GDP.

Citation: http://ec.europa.eu/eurostat/statis...e_EU-28:_Spain.2C_Ireland.2C_Italy_and_France

 

[Shotgunner51]

China rejects Moody’s credit downgrade as 'absolutely groundless'
Published time: 24 May, 2017 09:50 Edited time: 24 May, 2017 10:14

International rating agency Moody’s has downgraded China’s credit rating to A1 from Aa3, saying it expects the financial strength of the economy to erode in the coming years as growth slows and debt continues to rise.

It estimated that while the government budget deficit in 2016 was "moderate" at around three percent of gross domestic product (GDP), the debt burden would rise toward 40 percent of GDP by 2018 and 45 percent by the end of the decade.

Senior vice president for Moody's sovereign rating group, Marie Diron told CNBC the catalyst for the downgrade was a combination of factors, including expectations that potential growth would fall to five percent by the end of the decade.

"Official growth targets are also moving down, but probably more slowly. So the economy is increasingly reliant on policy stimulus," she said.​

In a statement on its website, China's Finance Ministry said the downgrade was “absolutely groundless” and based on an "inappropriate method." It added Moody's was overestimating the difficulties China's economy faces while underestimating the government's efforts to tackle structural reforms and overcapacity.

Despite the downgrade, Moody’s shifted to a stable outlook for China, from negative, citing balanced risks. Last year it lowered the outlook to negative from stable, pointing to rising debt, falling currency reserves and uncertainty over the authorities’ ability to carry out reforms.

"The stable outlook reflects our assessment that, at the A1 rating level, risks are balanced," Moody’s said in the statement Wednesday. "The erosion in China’s credit profile will be gradual and, we expect, eventually contained as reforms deepen..."​

It added the government's control of much of the economy, the financial system and cross-border capital flows offer the ability to maintain stability in the near term.

S&P currently rates China’s foreign and local currency long-term debt at AA- with a negative outlook. Fitch places an A+ rating on both foreign and local currency long-term debt with a stable outlook.

In contrast, China's Dagong Global Credit Rating puts an AA+ level on China’s sovereign debt in local currency terms and AAA in foreign currency terms, which is the highest level.

https://www.rt.com/business/389542-moodys-downgrades-china-rating/

 

[randomradio]

Would recommend reading it from the article. Posted snippets below. It's the first downgrade since 1989.

https://www.moodys.com/research/Moo...-rating-to-A1-from-Aa3-and-changes--PR_366139

China's local currency and foreign currency senior unsecured debt ratings are downgraded to A1 from Aa3. The senior unsecured foreign currency shelf rating is also downgraded to (P)A1 from (P)Aa3.

China's local currency bond and deposit ceilings remain at Aa3. The foreign currency bond ceiling remains at Aa3. The foreign currency deposit ceiling is lowered to A1 from Aa3. China's short-term foreign currency bond and bank deposit ceilings remain Prime-1 (P-1).

...notwithstanding the moderate general government budget deficit in 2016 of around 3% of GDP, we expect the government's direct debt burden to rise gradually towards 40% of GDP by 2018 and closer to 45% by the end of the decade, in line with the 2016 debt burden for the median of A-rated sovereigns (40.7%) and higher than the median of Aa-rated sovereigns (36.7%).

-----------------------------

Some more reading material.
http://www.bbc.com/news/business-40029092

https://www.nytimes.com/2017/05/24/business/china-downgrade-explained.html

 

[grey boy 2]

Its not always a fair game, my dear Indians, sometimes you lose, sometimes you win
Please try not to looking at anything so-called negative of China as your joy
Sweet dreams never last LOL

http://www.financialexpress.com/bud...ubramanian-slammed-sps-poor-standards/530833/

 

[Shotgunner51]

Would recommend reading it from the article. Posted snippets below. It's the first downgrade since 1989.
https://www.moodys.com/research/Moo...-rating-to-A1-from-Aa3-and-changes--PR_366139

Its not always a fair game

Already posted in #78 here, threads merged, please continue discussion on this thread, thanks. China is a creditor nation, it'll be interesting to see how Moody's gives sovereign ratings on those debtor nations, as well as on those governments with public debt exceeding 60% of GDP. Well, it's Moody's, don't expect too much.
https://www.wsj.com/articles/justice-department-investigating-moodys-investors-service-1422822296

 

[Han Patriot]

Its not always a fair game, my dear Indians, sometimes you lose, sometimes you win
Please try not to looking at anything so-called negative of China as your joy
Sweet dreams never last LOL

http://www.financialexpress.com/bud...ubramanian-slammed-sps-poor-standards/530833/

These naive Indys don't understand the global game, always the good lil boy following the 'international rule'. The only reason they are still afloat and not bankrupt is because of foreign investment inflows. Imagine a country where 25% of the budget goes to paying interests.

 

[Jlaw]

These naive Indys don't understand the global game, always the good lil boy following the 'international rule'. The only reason they are still afloat and not bankrupt is because of foreign investment inflows. Imagine a country where 25% of the budget goes to paying interests.

They stay afloat because the worthless Indian rupee is not free flowing. Its not accepted form of payment in most countries. If they allow it to free flow it would tank like a rock in water.

 

[randomradio]

These naive Indys don't understand the global game, always the good lil boy following the 'international rule'. The only reason they are still afloat and not bankrupt is because of foreign investment inflows. Imagine a country where 25% of the budget goes to paying interests.

It's the exact opposite. Our FII is extremely low, only a few billions. Our FDI has picked up only recently.

You forget that our economy is almost entirely dependent on consumption.

In fact, India's growth right now is purely being driven by consumption.
http://www.forbesindia.com/article/...y-a-single-enginedomestic-consumption/44299/1

Investments into equities is being driven mainly by the domestic market right now.

It is your Chinese economy which is dependent on investment.

The reason why we want a ratings upgrade is because we want to internationalize the INR. And it cannot be done without the ratings upgrade because 'other' countries want to see India's ratings upgrade before they decide to rely on the INR.

You are so insecure that even though all I did was post news regarding China, you brought in India and made it into a slug fest for no reason.

They stay afloat because the worthless Indian rupee is not free flowing. Its not accepted form of payment in most countries. If they allow it to free flow it would tank like a rock in water.

https://www.bloomberg.com/news/arti...trols-trigger-a-backlash-after-deals-thwarted

https://www.ft.com/content/87d8a7e8-cfe8-11e6-b06b-680c49b4b4c0

 

[Han Patriot]

It's the exact opposite. Our FII is extremely low, only a few billions. Our FDI has picked up only recently.

You forget that our economy is almost entirely dependent on consumption.

In fact, India's growth right now is purely being driven by consumption.
http://www.forbesindia.com/article/...y-a-single-enginedomestic-consumption/44299/1

Investments into equities is being driven mainly by the domestic market right now.


It is your Chinese economy which is dependent on investment.

The reason why we want a ratings upgrade is because we want to internationalize the INR. And it cannot be done without the ratings upgrade because 'other' countries want to see India's ratings upgrade before they decide to rely on the INR.

You are so insecure that even though all I did was post news regarding China, you brought in India and made it into a slug fest for no reason.



https://www.bloomberg.com/news/arti...trols-trigger-a-backlash-after-deals-thwarted

https://www.ft.com/content/87d8a7e8-cfe8-11e6-b06b-680c49b4b4c0

I think you have no understanding of domestic debt versus current account balance. Most Chinese debts are domestic debt and denominated in RMB, the government in theory can print as much money as needed as long as inflation is under control, and if the expansion of credit coincides with the expansion of the economy.

Chinese economy is financed by exports and not FDI initially, FDI is only around 100 bil USD$, but if you calculate net investments, it is negative since China also invests alot abroad. Besides, China's domestic consumption is 3-4 times larger than India. Current Chinese economy is primarily driven by consumption and fixed asset investment.

For India's case, you depend on FDI/FII to finance your trade deficit, without these inflows India couldn't pay for her imports and your country would go literally bankrupt.

Compare the foreign debt for both countries, China is a net creditor at around 2 trillion USD$ and India is a net debtor at around 150 bil USD$. If the international bankers want to screw India, it's as easy as ABC. There is a reason why Indian sovereign rating is only one notch above junk.

https://www.bloomberg.com/news/arti...escue-as-inflows-rise-to-bridge-india-deficit

"India’s current account deficit is being financed in large part by foreign direct investment inflows,"

http://blogs.economictimes.indiatim...-ready-for-the-next-big-leap-into-the-future/

Three years ago, the country was running the risk of a sovereign ratings downgrade (to junk status) that could have potentially snowballed into India’s isolation from global capital markets.

Remember when Rupee went from 45 a dollar to 65+ overnight? Inflation was in the 10s? Now your economy is only slightly better with still a high inflation at 5+%. Chinese currency OTOH went from 6.2 to 6.8 (the level before the big yuan appreciation).

These Indys will never understand how China can build world class infrastructure with impunity. We are a net creditor, we do not need to borrow foreign dollars to finance our construction, sovereign ratings have not much effect on us, but for India, the cost of borrowing will increase substantially if their rating drops.

 

[Shotgunner51]

China is a net creditor at around 2 trillion USD$

Yes China is a creditor nation

China Mainland: +SDR1.3394 trillion or +$1.8005 trillion (end 2016)
Hong Kong: +HK$9,155.0 billion or +US$1.1808 trillion (end 2016)
Taiwan: +$1.053905 trillion (end 2015)​

China Mainland is walking the development path of East Asia, I expect international position to continue growing in coming years.

India is a net debtor at around 150 bil USD$

Latest data, India is a net debtor nation with IIP at –$364.664 billion at end of December 2016. Such a degree of indebtedness isn't serious, it's about average, better than HIPC (Heavily Indebted Poor Countries), Eastern Europe, Latin America and US. I don't know where India is heading, likely following their role model US.

Source: https://m.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=16921

 

[randomradio]

For India's case, you depend on FDI/FII to finance your trade deficit, without these inflows India couldn't pay for her imports and your country would go literally bankrupt.

Yeah, we've been relying on capital accounts, but BoP has been stable for decades now, even with large trade deficits.

You can see the transition from the BJP to the Congress from 2004 onwards.

Regardless, it's been a comfortable run overall. It's better than what it could have been considering the oil prices.

If the deficit starts mounting, we will just stick trade curbs or higher tariffs on Chinese imports.

Besides, China's domestic consumption is 3-4 times larger than India. Current Chinese economy is primarily driven by consumption and fixed asset investment.

The whole world knows India is consumption-led while China is investment-led.

Both are switching places now.

This article should be a good read in hindsight.
http://www.dnaindia.com/money/interview-china-s-investment-led-growth-a-time-bomb-1245641

 

[Han Patriot]

Yeah, we've been relying on capital accounts, but BoP has been stable for decades now, even with large trade deficits.

You can see the transition from the BJP to the Congress from 2004 onwards.

Regardless, it's been a comfortable run overall. It's better than what it could have been considering the oil prices.

If the deficit starts mounting, we will just stick trade curbs or higher tariffs on Chinese imports.

The whole world knows India is consumption-led while China is investment-led.

Both are switching places now.

This article should be a good read in hindsight.
http://www.dnaindia.com/money/interview-china-s-investment-led-growth-a-time-bomb-1245641

If only it is that simple, Indians have no choice but to buy Chinese products, the other choice is expensive Western or Japanese imports. You can call our products junk but the funny thing is you buy our junk 'tunnel boring machines, telecom equipment, train sets, supercritical turbines, pharmaceutical APIs, port machinery, machine tools, electronics' by the billions and how hard we may try, we can only find Indian minerals to be items of value. So who is the sucker here?

We had been a 'timebomb' for decades, but the irony is Chinese citizens have better infrastructure, better clothing and well fed compared to you Indians. Remember, you are a country dependent on monsoon rain to control inflation.

China structure
household consumption: 38.7%
government consumption: 14.2%
investment in fixed capital: 42.3%
investment in inventories: 1.5%
exports of goods and services: 20.5%
imports of goods and services: -17.2% (2016 est.)

Indian structure
household consumption: 60.8%
government consumption: 11.4%
investment in fixed capital: 27.6%
investment in inventories: 3%
exports of goods and services: 19%
imports of goods and services: -21.8% (2016 est.)

You do the math since China has an economy 5 x of India. You still do not understand the types of debt and the function of debt, MONEY IS DEBT. The moment all debt is paid, there will cease to be money.

 

[randomradio]

If only it is that simple, Indians have no choice but to buy Chinese products, the other choice is expensive Western or Japanese imports. You can call our products junk but the funny thing is you buy our junk 'tunnel boring machines, telecom equipment, train sets, supercritical turbines, pharmaceutical APIs, port machinery, machine tools, electronics' by the billions and how hard we may try, we can only find Indian minerals to be items of value. So who is the sucker here?

We rely on on both Chinese and western goods that are made in China. That's why the trade deficit is so high. It would have been very different if the western companies made their stuff in their own country instead.

Eventually many of those goods will be made in India. Even Chinese companies have started making in India. For example, smartphone companies.

http://gadgets.ndtv.com/mobiles/new...s-set-up-in-india-in-last-year-prasad-1451588

Right now, manufacturing is making a transition, shifting from other countries into India. So that trade deficit is a temporary phenomenon, probably will end well before 2025. Oil prices are slowly set to erode to very low levels by then. Even if we don't export, imports will reduce.

Most of the high end stuff we buy from China is very less. Most of our imports are low-tech, like consumer electronics, easily sourced from elsewhere, particularly within the country.

So you simply stick tariffs on imported electronics and give tax sops for domestic production, as is happening in the smartphone industry. But we can't do that to oil or gold.

China structure
household consumption: 38.7%
government consumption: 14.2%
investment in fixed capital: 42.3%
investment in inventories: 1.5%
exports of goods and services: 20.5%
imports of goods and services: -17.2% (2016 est.)

Indian structure
household consumption: 60.8%
government consumption: 11.4%
investment in fixed capital: 27.6%
investment in inventories: 3%
exports of goods and services: 19%
imports of goods and services: -21.8% (2016 est.)

This shows what I said. China is led by investment and has less consumption.

China's just built infrastructure. The article I posted says the same.

 

[Shotgunner51]

western goods that are made in China

western companies made their stuff in their own country instead

What "western goods made in China"?

1. Labor intensive has dropped to only 16%, in fact China's exports is dominated by mechanical & electrical (41%), hi-tech (20%), motors & generators (5%), integrated circuits (5%), steel, transport, shipbulding, etc. In fact China alone accounts for 40% of machinery made on earth, same goes with other heavy industries, and over half of electrics. Export powerhouses like ZPMC, SANY, Zoomlion, Gree, Skyworth, Haier, TCL, Huawei teleco, Hi-Sense, Tianqi Lithium, China General Nuclear, Trina Solar, Goldwind, ZTE telco, Baosteel, Jiangnan Shipyard, Chinalco, Aux, DJI, Lenovo, Harbin Electric, Shanghai Electric, ... are very Chinese, what's "western"?
2. Even for Apple, except for the brand, each single product has core components almost entirely supplied by hi-tech vendors based in China, SK, Japan, Taiwan and Germany. Without hi-tech supply chain of components and machines (robotics), how "western companies" like Apple can "made their stuff in their own country instead"?
3. Over 78% of China's inbound FDI came from Hong Kong alone, followed by Singapore, Taiwan, South Korea and Japan, what's so western? Made in China is dominated by Chinese own capital, what "western" has to do with it?
   
4. On intellectual properties (IP), China is largest filer of patents, industrial designs even more than rest-of-the-world combined. Made in China is dominated by Chinese own IP, what "western" has to do with it?

 

[randomradio]

What "western goods made in China"?

1. Labor intensive has dropped to only 16%, in fact China's exports is dominated by machinery, followed by electrics, electronics, transport, steel, shipbulding, etc. In fact China alone accounts for 40% of machinery made on earth, same goes with other heavy industries, and over half of electrics. Companies like ZPMC, SANY, Zoomlion, Gree, Skyworth, Haier, TCL, Huawei teleco, Tianqi Lithium, China General Nuclear, Trina Solar, Goldwind, ZTE telco, Baosteel, Jiangnan Shipyard, Chinalco, Aux, DJI, Lenovo, Harbin Electric, Shanghai Electric, ... are Chinese, what's "western"?

So? This has nothing to do with what I said.

1. Except for the brand name, each Apple product has almost all hardware components sourced in China, SK, Japan, Taiwan and Germany, then assembled. How "western companies" like Apple can "made their stuff in their own country instead"?

What matters is the IPR. Even if China makes Apple, it is still a western product designed by a western company. Many Indians wants that, whether it is made in China or India. So many western products are made in China.

You probably missed it, but I said "both Chinese and western goods", not just western goods.

Trade dynamics will change depending on who you are sourcing stuff from. If western countries assembled the iPhone and other electronics, then our trade relations would have been different, on a more equal footing instead of having a surplus with them, leaving more room for growth.

That would mean India's trade deficit with China would have been smaller, leaving more room for growth.

Now there is only negativity and threat of protectionism among all the major trade blocs because of skewed trade.

So self-reliance has become more important, particularly for India. Instead of importing Chinese electronics and machinery, India will have it manufactured at home. Why is it difficult to understand this?

1. Over 78% of China's inbound FDI came from Hong Kong alone, followed by Singapore, Taiwan, South Korea and Japan, what's so western? What's "western" has to do with China making with own capital?

Whatchu talkin' 'bout? Never said anything about Chinese FDI.

1. Even on IP, China is largest filer of patents, industrial designs even more than rest-of-the-world combined, what's "western" has to do with China making with own IP?

Never talked about Chinese IP either.

You haven't understood my point. Yeah, China makes 40% of all machinery on earth, okay, but India wants to change that, is all I'm saying. And what this does is reduce trade deficit for India, which means India is less dependent on Capital Accounts for managing BoP.

The other poster said India is heavily dependent on Capital Accounts to manage forex and will collapse without FDI, while I only said that's not the case.